Hot & Coal
There's a giant cloud looming over the world of energy investing. Somehow, someday, to some extent, carbon dioxide is going to get a price tag from the U.S. government. Until then, huge, long-term investments worth billions of dollars are going to be bets placed on what that price tag — the regulatory policy — is ...
There's a giant cloud looming over the world of energy investing. Somehow, someday, to some extent, carbon dioxide is going to get a price tag from the U.S. government. Until then, huge, long-term investments worth billions of dollars are going to be bets placed on what that price tag -- the regulatory policy -- is going to look like. (TXU has already placed its bet.)
There's a giant cloud looming over the world of energy investing. Somehow, someday, to some extent, carbon dioxide is going to get a price tag from the U.S. government. Until then, huge, long-term investments worth billions of dollars are going to be bets placed on what that price tag — the regulatory policy — is going to look like. (TXU has already placed its bet.)
We're sitting on tons and tons of coal here in America, and there's a lot of energy we can get out of it. We can pulverize it — the traditional way we've been generating electric power — we can gasify it, and we can make liquid fuel out of it. And it's cheap. The problem is that it very cheaply cooks the planet.
But as a recent BusinessWeek article noted, it's new technology, not just global warming, that is changing the way we think about coal's competitiveness in the energy mix. Venture capitalist Vinod Khosla, who backed the failed prop 87 in California earlier this year, may offer a glimpse into investments to come.
Khosla is taking a hard look at the economics of electric power and says he has come away "totally shocked." The era of coal may be ending, he declares: "Nobody in their right minds should be building a coal plant."
Has Khosla gone off the deep end? If so, he's not alone. "It's the definition of financial insanity to invest in a new coal plant," agrees Marc Brammer, head of research for consulting firm Innovest Strategic Value Advisors. Even some utility executives see big risks. "It's very likely the investment decisions many are making, to build long-lived high-carbon-dioxide-emitting power plants, are decisions we'll all live to regret," warns Vice-President Gary Serio of Entergy Corp. (ETR ), which owns several coal plants.
…
Without coal, where will power come from? Khosla's grand vision is to repower the U.S. via solar plants in the American Southwest. The idea: Use thousands of acres of mirrors to focus solar energy, heating water to drive turbines. An analysis of new Australian solar technology suggests that it is cost-competitive even with today's coal plants. "I'm almost convinced that the cheapest plant would be solar thermal," says Khosla.
A WaPo business section story today struck a similar tone on solar, seeing it as potentially competitive without government subsidies.
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